6-23-11 report and recommendation

8/6/2019 6-23-11 Report and Recommendation

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UNITED STATES DISTRICT COURTFOR THE DISTRICT OF RHODE ISLAND

ELOISA COSAJAY, :

Plaintiff, :

:

v. : CA 10-442 M

:

MORTGAGE ELECTRONIC :

REGISTRATION SYSTEMS, INC., :

CM REO TRUST, and :

SAXON MORTGAGE SERVICES, INC., :

Defendants. :

REPORT AND RECOMMENDATION

David L. Martin, United States Magistrate Judge

This is a declaratory judgment action in which the Plaintiff

seeks a declaration that the assignments of her mortgage are

invalid, that her mortgage and promissory note are not held by any

of the Defendants, and that the Defendants lack standing to

foreclose on the mortgage or enforce the note. See Complaint 8

b; see also id. 24; id., prayer for relief A, C, D, E, O.

Before the Court is a motion to dismiss filed by Defendants

Mortgage Electronic Registration Systems, Inc. (MERS), CM REO

Trust (CM REO), and Saxon Mortgage Services, Inc. (Saxon)

(collectively Defendants), pursuant to Fed. R. Civ. P. 12(b)(1).

See Defendants Mortgage Electronic Registration Systems, Inc., CM

REO Trust and Saxon Mortgage Services, Inc.s Motion to Dismiss

(Docket (Dkt.) #5) (Motion to Dismiss or Motion). Defendants

Case 1:10-cv-00442-M -DLM Document 21 Filed 06/23/11 Page 1 of 36 PageID #: 431


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2

contend that Plaintiff Eloisa Cosajay (Plaintiff or Cosajay)

does not have standing to dispute their power to foreclose by

challenging the validity of the assignments of her mortgage from

the loan originator to its present holder because Plaintiff was not

a party to any of those agreements.

The Motion has been referred to me for preliminary review,

findings, and recommended disposition pursuant to 28 U.S.C.

636(b)(1)(B). After listening to the arguments presented,

reviewing the memoranda and exhibits submitted, and performing

independent research, I recommend that the Motion be treated as a

motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and that it

be granted.

I. Facts

On April 24, 2007, Plaintiff obtained a loan from Lime

Financial Services, Ltd. (Lime), in the amount of $220,000 in

exchange for a promissory note. Complaint 9; see also id.,

Exhibit (Ex.) D (Mortgage). The note was secured by a mortgage

which the Plaintiff executed in favor of Lime, as lender, and MERS,

as Limes nominee, successor and assign, and as the mortgagee under

the mortgage agreement. Id., Ex. D. The mortgages security

consisted of property owned by Plaintiff and located at 220

Sterling Avenue, Providence, Rhode Island (the Property).

Complaint 8; see also id., Ex. D.

Plaintiffs promissory note and mortgage were the subject of



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1 While Plaintiff does not explicitly state that she has defaultedon her loan, see Complaint, she has not disputed in her filings or at the

March 14, 2011, hearing on the Motion to DismissDefendants repeated

assertions of this fact.

3

three assignments. Complaint 11. On March 12, 2008, MERS, as

nominee for Lime, assigned the mortgage to Deutsche Bank Trust

Company Americas, as Trustee and Custodian for IXIS Real Estate

Capital, Inc. (Deutsche Bank) (the First Assignment). Id.

11; see also id., Ex. A (First Assignment). On September 4, 2008,

Deutsche Bank assigned the mortgage to Saxon (the Second

Assignment). Complaint 11; see also id., Ex. B (Second

Assignment). On March 5, 2009, Saxon assigned the mortgage to CM

REO (the Third Assignment). Complaint 11; see also id., Ex. C

(Third Assignment). Each assignment was recorded in the Propertys

chain of title at the Recorder of Deeds for the City of Providence.

Complaint, Exs. A, B, C. Saxon, on behalf of CM REO and through

its local counsel, Nicholas Barrett & Associates, initiated

foreclosure proceedings in October 2010 after Plaintiff failed to

make monthly payments and defaulted on her loan.1 Complaint 10.

Plaintiff filed this action to enjoin the foreclosure proceedings

by alleging that the assignments of her mortgage are invalid. Id.

8-15.

II. Plaintiffs Contentions

Plaintiff challenges the validity of the assignments on

multiple grounds. She alleges that the persons executing the



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assignments lacked authority to sign them and that the documents

themselves were fraudulent and manufactured .... Id. 11. In

support of this allegation, Plaintiff avers that the persons

executing the assignments were not employees, officers, or properly

authorized agents of the entities for whom they purported to act

and that the signatures on the assignments are fraudulent and/or

not authentic. See id. 13.

Plaintiff also alleges that MERS, as Limes nominee, did not

have the authority to assign Plaintiffs mortgage on March 12,

2008, the date of the First Assignment. See id. 11. As support

for this contention, Plaintiff posits that: If this loan was

included in a loan pool ultimately transferred to a securitized

trust, the mortgage had already been allegedly sold to a

Sponsor/Seller and thus any assignment was invalid. Id.

Plaintiff asserts that [a]ny assignment which would have been made

on or [after] March 12, 2008[,] was outside the time specified by

any securitized trust which Saxon refers to as Deutsche Bank Trust

Company Americas as Trustee and Custodian for IXIS Real Estate

Capital Inc. Id. Plaintiff further asserts that this trust does

not exist but that another IXIS Trust closed on April 30, 2007, and

that, therefore, no assignment to that trust was possible on March

12, 2008. Id. As a result, according to Plaintiff, the First

Assignment was to a non-existent entity and any subsequent



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2 For the sake of completeness, the Court reproduces the portion ofPlaintiffs Complaint which contains these allegations:

11. ... If this loan was included in a loan pool ultimately

transferred to a securitized trust, the mortgage had alreadybeen allegedly sold to a Sponsor/Seller and thus anyassignment was invalid. Thus MERS no longer held the mortgageon March 12, 2008[,] and never held the note on any datebecause MERS does not hold notes. Any assignment which wouldhave been made on or [after] March 12, 2008[,] was outside thetime specified by any securitized trust which Saxon refers toas Deutsche Bank Trust Company Americas as Trustee andCustodian for IXIS Real Estate Capital Inc. Such entity doesnot exist. However the last IXIS Trust was Natixis RealEstate Capital Trust 2007-HE2, which was issued on April 1,2007. The closing date for this Trust was April 30, 2007.Thus no assignment to that Trust was possible on March 12,

2008. The [First Assignment] was to a non-existent entity.As a result the subsequent assignments were also void. As aresult, the mortgage and note could not have been transferredor assigned by MERS on March 12, 2008.

Complaint 11.

3 This allegation is not entirely clear because the terms Trust,Trust agreement, PSA, and Depositor are not defined in theComplaint. Because the pleading previously refers to CM REO Trust,Complaint 10, IXIS Trust, id. 11, and Natixis Real EstateCapital Trust 2007-HE2, id., the meaning of Trust agreement inparagraphs 14 and 15 (reproduced below) is uncertain.

14. Any REMIC securitized trust, by the terms of its Trustagreement and pursuant to its ability to accept qualifiedmortgages as defined by 26 USC Section 860[G], relating toReal Estate Mortgage Investment Conduits (REMIC), does nothave the power or authority to receive mortgages or notes morethan ninety days after the closing date specified in the Trustagreement, which at the latest could have been April 30, 2007.

5

assignments were also void.2 Id.

Less clearly, Plaintiff also contends that [a]fter the

execution of the Trust agreement, if Plaintiffs loan was included

in the PSA, the only party with any authority or capacity to assign

the mortgage deed or to transfer the mortgage note to the Trust was

the Depositor.3 Complaint 15.



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The terms of all REMIC Trust agreements do not authorize suchacquisition and the status of the Trust as a REMIC do [sic]not allow such to accept such mortgages or notes at more than90 days beyond the closing date.

15. After the execution of the Trust agreement, if thePlaintiffs loan was included in the PSA, the only party withany authority or capacity to assign the mortgage deed or totransfer the mortgage note to a Trust was the Depositor.

Complaint 14-15. Presumably, PSA means Pooling and ServicingAgreement which the Complaint mentions (for the first time) in the prayerfor relief. See id., prayer for relief B.

6

III. The Complaint

A. Counts

In Count I Plaintiff essentially recites the factual

allegations underlying her claim. In Count II she asserts that

Defendants lacked standing to assign and transfer the note and

mortgage, to enforce the note, and to foreclose. Complaint 17.

Count III alleges that Defendants have the burden of proof of

establishing possession and ownership of the note and the mortgage

in addition to proving that the mortgage and note were transferred

pursuant to the law and the terms of the Trust agreement. Id.

19. Count III then asserts that Defendants have failed to do this,

see id. 20, and repeats that Defendants lack standing to enforce

the note or the mortgage, see id. 21. Count IV seeks a mandatory

injunction, preliminary injunction, and temporary restraining order

against all Defendants to prohibit an illegal foreclosure action

.... Id. 23. In Count V, Plaintiff posits:

28. On information and belief, if the loan had been

included in a REMIC Trust, Saxon has acted to collect



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funds for itself rather than on behalf of any Trust and

had previously advanced the Trust funds for payments on

the promissory notes allegedly contained in the loan

pool. Thus there is no default in relation to payments

allegedly due to any Trust, if the Plaintiffs loan is in

the Trusts loan pool, as it has been paid up to date by

the loan servicer.

29. If the Plaintiff[s] loan and mortgage are contained

in an IXIS Trust, it has been paid in full by either

Credit Default Swaps, mortgage insurance or payments by

loan servicers or other third party payments. There is

no subrogation for these payments. As a result, any

claim being made by Saxon is to seek payment on claims on

behalf of CM REO Trust, which it does not have any

authority to collect or enforce.

Complaint 28-29.

The allegations of Count VI are similar to those alleged in

Count V:

31. On information and belief, the IXIS Trust agreement

provided for mortgage insurance and credit default swaps

and payments of principal and interest advances by the

loan servicer and other third party payments, whereby,

the Plaintiff[s] obligations pursuant to their [sic]

promissory note have already been paid in full by

mortgage insurance provider and credit default swaps and

loan servicer and other similar entities. As a result no

default existed as to the actual holder of the note and

or the mortgage, which would authorize the note to be

accelerated or which would authorize foreclosure of the

mortgage.

Id. 31.

In Count VII, Plaintiff asserts [o]n information and belief,

Defendants do not possess an original endorsed note, id. 33,

that any note remains in the name of Lime Financial, id., and

that [p]ursuant to Rhode Island law, the Defendant [sic] cannot

foreclose due to the disconnect between the note and the mortgage,



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4 Although paragraph 15 references the PSA, Complaint 15, thisis the first time that the term Pooling and Servicing Agreement appearsin the Complaint, see n.3.

5 The Complaint identifies this statute as 26 USC 860(G),Complaint, prayer for relief B, N; see also Complaint 14. Forclarity, the Court uses the more standard identification of 26 U.S.C. 860G. See In re Cyrus II Pship, Bankruptcy No. 05-39857, 2008 WL

4371670, at *4 (Bankr. S.D. Tex. Sept. 11, 2008).

8

id. 34.

B. Prayer for Relief

In her prayer for relief, Plaintiff requests a declaratory

judgment that: a) the note and mortgage are not vested in

Defendants; b) pursuant to the terms of the Pooling and Servicing

Agreement4 and 26 U.S.C. 860G5 there can be no direct assignment

of the mortgage or transfer of the note from MERS as nominee for

Lime directly to any trust; c) any assignments from MERS as nominee

for Lime are invalid and void as a matter of law; d) Defendants do

not own or hold a secured claim on the Property and do not own or

hold the promissory note; e) any foreclosure proceedings previously

conducted against Plaintiff are invalid; f) Plaintiff is entitled

to recoup any proceeds paid to Defendants to reduce any obligation

allegedly due by Plaintiff; g) the loan executed by Plaintiff was

not a qualified mortgage pursuant to the Pooling and Servicing

Agreement and 26 U.S.C. 860G, and any IXIS Trust was not capable

of accepting said loan or mortgage at any time more than ninety

days after April 30, 2007, at the latest; h) the Second Assignment

was void for lack of an existing assignment; and i) the assignments



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6 The prayer for relief also includes a somewhat incoherent requestthat the Court issue a Declaratory Judgment that the scheme of Saxon inhiring Lender Processing Servicing, Inc.[,] constitutes and [sic] isdesigned to avoid the requirements for valid foreclosures of mortgages.Complaint, prayer for relief G. The Complaint does not allege thatSaxon hired Lender Processing Servicing, Inc., although such action couldpossibly be inferred, see Complaint 13 c (alleging that Bethany Hoodis not an Assistant Vice President of Saxon, but an employee of DefaultLoan Solutions ... formerly known as Fidelity Foreclosure Solutions,which is a division of Lenders Processing Servicing, Inc.).

7 In stating this, the Court reads Plaintiffs Complaint generously.As written, Plaintiffs request states: Order Saxon it paid to returnany mortgage payments made the Plaintiff since the securitization of theloan. Id., prayer for relief H.

9

were not made by corporate officers with requisite corporate

authority pursuant to law.6 Complaint, prayer for relief A-G,

I, K-L, NP.

Plaintiff additionally seeks an order: a) requiring Saxon to

return any mortgage payments which Plaintiff has made;7 and b)

quieting the title of Plaintiff by holding that the mortgage

executed to MERS as nominee for Lime is void and discharged. Id.

H, L. Plaintiff further seeks to have Defendants preliminarily

and permanently enjoined from commencing any further eviction or

collection actions against Plaintiff, id. J-K, and executing any

further assignments of the original mortgage, see id. L. Lastly,

Plaintiff prays for an award of compensatory and punitive damages,

attorneys fees, and costs against all Defendants for wrongful

foreclosure. Id. Q.

IV. Travel

Plaintiff filed the instant action on or about October 1,



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8 Plaintiff is a resident of Rhode Island. Complaint 1.Defendant MERS is a Delaware corporation with a principal place ofbusiness in Virginia. Notice of Removal 7. Defendant CM REO is atrust organized under the laws of Delaware. Id. 8. Defendant Saxonis a Texas corporation with a principal place of business in Texas. Id. 9.

10

2010, in the Providence County Superior Court. See Notice of

Removal (Dkt. #1) 1. Defendants removed the action to this Court

on October 29, 2010, on the basis of diversity of citizenship.8

See id. 5. Thereafter, on November 30, 2010, they filed the

instant Motion to Dismiss. Plaintiff filed an objection to the

Motion on January 14, 2011. See Objection to Motion to Dismiss

(Objection) (Dkt. #12). Defendants responded to the Objection in

a reply brief on February 25, 2011. See Defendants Reply

Memorandum to Plaintiffs Opposition to Defendants Motion to

Dismiss (Dkt. #18) (Defendants Reply).

A hearing on the Motion was held on March 14, 2011.

Thereafter, the Court took the matter under advisement.

V. Jurisdiction

A. Burden of Establishing Jurisdiction

Defendants have moved to dismiss for lack of subject matter

jurisdiction. See Memorandum of Law in Support of the Defendants

Motion to Dismiss (Defendants Mem.) at 4 (citing Fed. R. Civ. P.

12(b)(1)). They appear to argue that Plaintiff does not have

standing and that, therefore, the necessary requirement of a

case[] and controvers[y], Lujan v. Defenders of Wildlife, 504



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11

U.S. 555, 560-61, 112 S.Ct. 2130 (1992), for the exercise of

federal court jurisdiction is not satisfied, Defendants Mem. at 5

(citing Lujan v. Defenders of Wildlife, 504 U.S. at 559-60); see

also Davis v. Fed. Election Commn, 554 U.S. 724, 732, 128 S.Ct.

2759 (2008)(Article III restricts federal courts to the resolution

of cases and controversies.); United States Natl Bank of Oregon

v. Indep. Ins. Agents of Am., 508 U.S. 439, 446, 113 S.Ct. 2173

(1993)(The exercise of judicial power under Art. III of the

Constitution depends on the existence of a case or controversy

....); Simon v. E. Kentucky Welfare Rights Org., 426 U.S. 26, 37,

96 S.Ct. 1917 (1976)(No principle is more fundamental to the

judiciarys proper role in our system of government than the

constitutional limitation of federal-court jurisdiction to actual

cases or controversies.). Defendants assert that Plaintiff bears

the burden of establishing that she has standing to sue.

Defendants Mem. at 5 (citing Lujan, 504 U.S. at 561). However, in

making this assertion Defendants overlook that in Lujan and other

cases the Supreme Court has made clear that the party invoking

federal jurisdiction bears the burden of establishing it. See

Lujan, 504 U.S. at 561 (The party invoking federal jurisdiction

bears the burden of establishing [standing].); see also Steel Co.

v. Citizens for a Better Envt, 523 U.S. 83, 104, 118 S.Ct. 1003

(1998)(the party invoking federal jurisdiction bears the burden of

establishing its existence); FW/PBS, Inc. v. City of Dallas, 493



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U.S. 215, 231, 110 S.Ct. 596 (1990)([Standing] is the burden of

the party who seeks the exercise of jurisdiction in his favor)

(quoting McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189,

56 S.Ct. 780 (1936)); cf. Davis, 554 U.S. at 732 (the party

invoking federal jurisdiction [must] have standingthe personal

interest that must exist at the commencement of the litigation)

(internal quotation marks omitted).

Here Defendants removed the action to this Court. Therefore,

they are the parties invoking federal jurisdiction. Cf.

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3, 126 S.Ct.

1854 (2006)(Because defendants removed the case from state court

to District Court, plaintiffs were not initially the parties that

invoked federal jurisdiction.). Thus, the burden of demonstrating

standing for purposes of federal jurisdiction is on Defendants.

See Council of Ins. Agents & Brokers v. Juarbe-Jimnez, 443 F.3d

103, 108 (1st Cir. 2006)(burden of establishing elements of

standing is on party invoking federal jurisdiction)(citing Lujan,

504 U.S. at 561); Ramrez v. Snchez Ramos, 438 F.3d 92, 100 (1 st

Cir. 2006)(the party invoking federal jurisdiction bears the

burden of proving that she has standing); Mangual v. Rotger-Sabat,

317 F.3d 45, 56 (1st Cir. 2003)(The burden to establish standing

lies with the party invoking federal jurisdiction.); As You Sow v.

Sherwin-Williams Co., No. C-93-3577-VRW, 1993 WL 560086, at *1

(N.D. Cal. Dec. 21, 1993)(the burden of proving that plaintiff has



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Article III standing is with the removing defendants); see also

Amoche v. Guarantee Trust Life Ins. Co., 556 F.3d 41, 48 (1st Cir.

2009)(The party invoking federal jurisdiction has the burden of

establishing that the court has subject matter jurisdiction over

the case.); Danca v. Private Health Care Sys., Inc., 185 F.3d 1,

4 (1st Cir. 1999)([Removing] defendants have the burden of showing

the federal courts jurisdiction.); Murphy v. United States, 45

F.3d 520, 522 (1st Cir. 1995)(the party invoking the jurisdiction

of a federal court carries the burden of proving its existence);

cf. Flast v. Cohen, 392 U.S. 83, 101, 88 S.Ct. 1942 (1968)([I]n

terms of Article III limitations on federal court jurisdiction, the

question of standing is related only to whether the dispute sought

to be adjudicated will be presented in an adversary context and in

a form historically viewed as capable of judicial resolution. It

is for that reason that the emphasis in standing problems is on

whether the party invoking federal court jurisdiction has a

personal stake in the outcome of the controversy.)(quoting Baker

v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691 (1962))(bold added);

McNutt, 298 U.S. at 189 (In the nature of things, the authorized

inquiry is primarily directed to the one who claims that the power

of the court should be exerted in his behalf. As he is seeking

relief subject to this supervision, it follows that he must carry

throughout the litigation the burden of showing that he is properly

in court.).



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Accordingly, to the extent Defendants contend that Plaintiff

bears the burden of establishing she has standing to sue for

purposes of demonstrating that Article IIIs case or controversy

requirement is satisfied, the Court rejects such contention.

Defendants as the parties invoking this Courts jurisdiction bear

the burden of establishing it. See Amoche, 556 F.3d at 48; Danca,

185 F.3d at 4.

B. Finding Re Jurisdiction

Defendants have invoked the jurisdiction of the Court, and

Plaintiff has not disputed that jurisdiction exists. Indeed,

Plaintiff argues against dismissal for lack of jurisdiction.

Memorandum of Law (Plaintiffs Mem.) at 5-6. However, the Court

has an independent duty to satisfy itself that subject matter

jurisdiction exists. See Fafel v. DiPaola, 399 F.3d 403, 410 (1st

Cir. 2005)(The existence of subject-matter jurisdiction is never

presumed. Rather, federal courts ... must satisfy themselves that

subject-matter jurisdiction has been established.)(internal

quotation marks and citations omitted); In re Boston Herald, Inc.,

321 F.3d 174, 177 (1st Cir. 2003)(A federal court must satisfy

itself of its jurisdiction over a case ....); El Dia, Inc. v.

Hernandez Colon, 963 F.2d 488, 498 n.11 (1st Cir. 1992)(a federal

court must independently satisfy itself about basic concerns such

as subject matter jurisdiction).

The Court is satisfied from its examination of the Complaint



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9 The Complaint alleges that Plaintiff is a resident, Complaint 1, not a citizen, of Rhode Island. The First Circuit has noted that,[j]urisdictionally speaking, residency and citizenship are notinterchangeable. Valentin v. Hosp. Bella Vista, 254 F.3d 358, 361 n.1(1st Cir. 2001). However, this Court emulates the First Circuit inValentin and assumes that Plaintiff meant citizen of Rhode Island whenshe said resident. Id.

15

and the Notice of Removal that diversity jurisdiction exists. See

Complaint 1-4 (alleging that Plaintiff is a resident9 of Rhode

Island and that Defendants are out-of-state corporations); id. 9

(alleging that the amount of the promissory note underlying this

controversy is $220,000); see also Notice of Removal 5-11. The

Court is also satisfied that Defendants have standing for purposes

of Article III, Section 2 of the Constitution. See Pagn v.

Caldern, 448 F.3d 16, 27 (1st Cir. 2006)(The Constitution confines

federal courts to the adjudication of actual cases and

controversies.)(citing U.S. Const. art. III, 2, cl. 1; Allen v.

Wright, 468 U.S. 737, 750, 104 S.Ct. 3315 (1984)). An actual case

or controversy exists when the party seeking to invoke the courts

jurisdiction ... has a personal stake in the outcome of the claim

asserted. Pagn, 448 F.3d at 27 (quoting Baker v. Carr, 369 U.S.

186, 204, 82 S.Ct. 691 (1962)). Here, Defendants have a personal

stake in the outcome of the claims asserted because Plaintiff is

seeking, among other relief, a declaratory judgment that the

mortgage and note are not vested in or held by Defendants and also

compensatory and punitive [d]amages, attorney fees[,] and costs

against all defendants jointly and severally for wrongful



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10 In Blanchard 1986, Ltd. v. Park Plantation, LLC, 553 F.3d 405 (5th

Cir. 2008), the court explained:

This question of whether or not a particular cause of actionauthorizes an injured plaintiff to sue is a merits question,affecting statutory standing, not a jurisdictional question,affecting constitutional standing. In the words of theSupreme Court, once a plaintiff has suffered sufficient injuryto satisfy the case and controversy requirement of ArticleIII, jurisdiction is not defeated by the possibility that theaverments might fail to state a cause of action on whichpetitioners could actually recover. Thus, the district courtdismissed the rescission claim under Fed. R. Civ[.] P. 12(b)(6)for failure to state a claim upon which relief can be granted,and not Fed. R. Civ. P. 12(b)(1) for lack of subject-matterjurisdiction.

Id. at 409 (footnote omitted).

16

foreclosure. Complaint, prayer for relief. Accordingly, the

Court finds that subject matter jurisdiction exists.

VI. Treatment of the Instant Motion

Although subject matter jurisdiction exists, this

determination does not end the matter. The standing argument

advanced by Defendants is more properly treated as a motion to

dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon

which relief can be granted. See Harold H. Huggins Realty, Inc. v.

FNC, Inc., 634 F.3d 787, 795 n.2 (5th Cir. 2011)(Unlike a dismissal

for lack of constitutional standing, which should be granted under

Rule 12(b)(1), a dismissal for lack of prudential or statutory

standing is properly granted under Rule 12(b)(6).)(citing

Blanchard 1986, Ltd. v. Park Plantation, LLC, 553 F.3d 405, 409 (5th

Cir. 2008));10 Ctr. for Cmty. Justice & Advocacy v. RBS Citizens,

N.A., Case No. 10 cv10011, F.Supp.2d , 2011 WL 824763, at



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11 After making this observation, the AVX Corporation court stated:Nevertheless, we leave the ultimate choice between Rules 12(b)(6) and12(b)(1) for another day. United States v. AVX Corp., 962 F.2d 108, 114

17

*8 n.4 (E.D. Mich. Mar. 7, 2011)(Although dismissal for lack of

subject matter jurisdiction is properly brought under Rule

12(b)(1), dismissal for lack of standing is properly brought under

either Rule 12(b)(1) or Rule 12(b)(6).); Bridge v. Aames Capital

Corp., No. 1:09 CV 2947, 2010 WL 3834059, at *2 (N.D. Ohio Sept.

29, 2010)(construing defendants Rule 12(b)(1) as a motion to

dismiss for failure to state a claim); see also McInnis-Misenor v.

Maine Med. Ctr., 319 F.3d 63, 67 (1st Cir. 2003)(reviewing dismissal

pursuant to Rule 12(b)(6) for lack of standing and noting that

[n]ormally on a Rule 12(b)(6) motion to dismiss, only the

complaint is reviewed. However, where standing is at issue, it is

within the trial courts power to allow or to require the plaintiff

to provide by affidavit or amended complaint further

particularized allegations of fact deemed supportive of plaintiffs

standing)(quoting Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct.

2197 (1975)); Thompson v. Cnty. of Franklin, 15 F.3d 245, 247 (2nd

Cir. 1994)(dismissals for lack of standing may be made pursuant to

Fed. R. Civ. P. 12(b)(6) rather than 12(b)(1)); United States v.

AVX Corp., 962 F.2d 108, 114 n.6 (1st Cir. 1992)(noting that Courts

have often treated motions to dismiss for want of standing as

motions to dismiss for failure to state a claim, thus bringing them

under the rubric of Rule 12(b)(6));11 In re Cousins, 404 B.R. 281,



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n.6 (1st Cir. 1992). As far as this Magistrate Judge has been able todetermine, the First Circuit has not yet ruled definitively with respectto this question.

12 As support for this statement, the Edelkind court cited Faibischv. University of Minnesota, 304 F.3d 797, 801 (8th Cir. 2002), andValentin, 254 F.3d at 363. While the Faibisch opinion provides somesupport for the proposition that a challenge to a plaintiffs standingshould be made pursuant to Rule 12(b)(1), see Faibisch, 304 F.3d at 801(We have held ... that if a plaintiff lacks standing, the district courthas no subject matter jurisdiction. Therefore, a standing argumentimplicates Rule 12(b)(1).)(internal citation omitted), the Valentinopinion does not mention the word standing. Thus, this MagistrateJudge does not find that Valentin answers the question of whether in theFirst Circuit a challenge to a plaintiffs standing on the ground raisedby Defendants here should be made pursuant to Rule 12(b)(1) or 12(b)(6).

18

285 n.4 (Bankr. S.D. Ohio 2009)(Dismissal for lack of standing is

proper under Rule 12(b)(1) or 12(b)(6).). But see Edelkind v.

Fairmont Funding, Ltd., 539 F.Supp.2d 449, 453 (D. Mass. 2008)(A

motion to dismiss for lack of subject matter jurisdiction under

Fed. R. Civ. P. 12(b)(1) is appropriate when the plaintiff lacks

standing to bring the claim.);12 Provencio v. Def. Tech. Corp. of

Am., No. 1:07-CV-0651 AW1 DLB, 2007 WL 2177800, at *1 (E.D. Cal.

July 27, 2007)(Because standing is jurisdictional, it is properly

raised through Rule 12(b)(1) and not through Rule

12(b)(6).)(citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir.

2000)); Ross-Randolph v. Allstate Ins. Co., Civil Action No. DKC

99-3344, 2001 WL 36042162, at *2 (D. Md. May 11, 2001)(According

to the Second Circuit, the standing inquiry involves both

constitutional limitations on federal-court jurisdiction and

prudential limitations on its exercise, and thus should be analyzed

under 12(b)(1).)(citing Thompson v. Cnty. of Franklin, 15 F.3d at



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19

247)(internal quotation marks omitted).

VII. Standard

For purposes of ruling on a motion for want of standing, the

trial and reviewing courts must accept as true all material

allegations of the complaint and must construe the complaint in

favor of the complaining party. United States v. AVX Corp., 962

F.2d at 114 (citing Warth, 422 U.S. at 501). In practical effect,

the standard is much the same as that traditionally applied to

motions to dismiss made under Fed. R. Civ. P. 12(b)(6). Id.; see

also New Hampshire Right to Life Political Action Comm. v. Gardner,

99 F.3d 8, 12 (1st Cir. 1996)(crediting the plaintiffs factual

allegations to the extent that they are material and construing

those alleged facts, together with the reasonable inferences

therefrom, in favor of the plaintiff).

Satisfaction of the Rule 12(b)(6) standard requires a

plaintiff to provide the grounds of her entitlement to relief, and

this demands more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action will not do. Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007).

On a motion to dismiss, courts are not bound to accept as true a

legal conclusion couched as a factual allegation. Id. Factual

allegations must be enough to raise a right to relief above the

speculative level. Id. Rule 8(a)(2) still requires a showing,

rather than a blanket assertion, of entitlement to relief. Id. at



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20

555 n.3.

To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to state a claim to

relief that is plausible on its face. Ashcroft v. Iqbal, ___ U.S.

___, 129 S.Ct. 1937, 1960 (2009)(quoting Twombly, 550 U.S. at 570).

A claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged. Iqbal, 129

S.Ct. at 1949. The plausibility standard is not akin to a

probability requirement, but it asks for more than a sheer

possibility that a defendant has acted unlawfully. Id. (quoting

Twombly, 550 U.S. at 556). When a complaint pleads facts that are

merely consistent with a defendants liability, it stops short of

the line between possibility and plausibility of entitlement to

relief. Id. (quoting Twombly, 550 U.S. at 557). Thus, a court

must consider the factual allegations in [plaintiff]s complaint

to determine if they plausibly suggest an entitlement to relief.

Id. at 1951. Accordingly, the Federal Rules do not require courts

to credit a complaints conclusory statements without reference to

its factualcontext. Id. at 1954; cf. Horvath v. Bank of New

York, N.A., Civil Action No. 1:09-cv-01129 (AJT/TCB), 2010 WL

538039, at *1-2 (E.D. Va. Jan. 29, 2010)(granting motion to dismiss

because complaint fail[ed] to set forth facts that make

[plaintiff]s claims plausible when evaluated in light of settled



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21

law pertaining to the negotiability of promissory notes and the

enforcement of deeds of trust securing such notes following

negotiability).

VIII. Basis for Motion

In this action, Plaintiff seeks principally to enjoin

Defendants from foreclosing on the Property by challenging the

validity of the assignments of the mortgage and the note.

Complaint 8 a; id. 11. Plaintiff alleges that because of

improprieties or deficiencies in the assignments, Defendants lack

standing to foreclose or enforce the note. Id. 17. Defendants

have moved for dismissal on the ground that Plaintiff has no

standing to challenge the validity of the assignmentsin order to

enjoin foreclosure because she is neither a party to, nor a third-

party beneficiary of, the assignments or the Pooling and Servicing

Agreement (PSA). Defendants Mem. at 5-6.

IX. Law re Standing

A. General

One of the prudential aspects of standing is the general

prohibition on a litigants raising another persons legal rights

.... Osediacz v. City of Cranston, 414 F.3d 136, 139 (1st Cir.

2005)(quoting Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315

(1984)). Even when a plaintiff has alleged injury sufficient to

meet the case or controversy requirement, the Supreme Court has

held that the plaintiff generally must assert his own legal rights



22/36

13 In determining state substantive law, a federal court:

look[s] to the pronouncements of a states highest court inorder to discern the contours of that states law. GonzlezFigueroa v. J.C. Penney P.R., Inc., 568 F.3d 313, 318 (1st Cir.2009). If the highest court has not spoken directly on thequestion at issue, [the federal court] predict[s] how thatcourt likely would decide the issue, looking to the relevantstatutory language, analogous decisions of the state supremecourt, decisions of the lower state courts, and other reliablesources of authority. Id. at 31819.

Barton v. Clancy, 632 F.3d 9, 17 (1st Cir. 2011); see also Douglas v. York

Cnty., 433 F.3d 143, 149 (1st Cir. 2005).

22

and interests and cannot rest his claim to relief on the legal

rights or interests of third parties. Warth, 422 U.S. at 499;

Pagn v. Caldern, 448 F.3d 16, 27 (1st Cir. 2006);see alsoWarth,

422 U.S. at 500 (standing in no way depends on the merits of

plaintiffs contention that particular conduct is illegal ....);

Bowen v. Mollis, 945 A.2d 314, 317 (R.I. 2008)( A standing inquiry

focuses on the party who is advancing the claim rather than on the

issue the party seeks to have adjudicated.).

B. Rhode Island Law

Since the basis for this Courts jurisdiction is diversity

jurisdiction, Plaintiffs claims are governed by Rhode Island law.13

Miree v. DeKalb Cnty., Georgia, 433 U.S. 25, 28, 97 S.Ct. 2490

(1977); Barton v. Clancy, 632 F.3d 9, 17 (1st Cir. 2011)(A federal

court sitting in diversity ... must apply state substantive law.).

Under Rhode Island law, only parties to a contract may seek to have

rights declared under a contract. See Brough v. Foley, 525 A.2d

919, 921 (R.I. 1987)(holding that the sole right that plaintiffs



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23

had in respect to the subject real estate is set forth in the sales

agreement that they entered into with [the executor] .... This

agreement gave no right to plaintiffs to second-guess the validity

of the right of first refusal, nor did it give plaintiffs the right

to supervise or pass upon the effectiveness of the assignment to

[the assignor]s nominee, or the nominees exercise of that

assignment.); id. at 922 (The plaintiffs were, in substance,

strangers to those transactions and were given no rights under the

contract to challenge the transactions.); State v. Med.

Malpractice Joint Underwriting Assn, No. 03-0743, 2005 WL 1377493,

at *2 (R.I. Super. Ct. June 7, 2005)(Only parties to the contract

or intended third party beneficiaries may seek to have rights

declared under a contract.)(citing Forcier v. Cardello, 173 B.R.

973, 984-85 (Bankr. D.R.I. 1994)); Baxendale v. Martin, No. 94-

2303, 1997 WL 1051072, at *2, (R.I. Super. Ct. Aug. 14, 1997)(one

who is not a party and has no right to enforce a contract lacks

standing to seek a declaration of rights under that contract); id.

at *3 (declining to grant declaratory relief on the ground that

plaintiff lacked standing to bring declaratory action); see also

Forcier, 173 B.R. at 984 (The Rhode Island Supreme Court

recognizes the general rule that only intended, and not incidental,

third party beneficiaries can maintain an action for damages

resulting from a breach of contract between two other contracting

parties.)(citing Davis v. New England Pest Control Co., 576 A.2d



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24

1240, 1242 (R.I. 1990); Finch v. Rhode Island Grocers Assn, 175

A.2d 177, 184 (R.I. 1961)); cf. Meyer v. City of Newport, 844 A.2d

148, 151 (R.I. 2004)(In Sousa v. Town of Coventry, 774 A.2d 812,

815 n.4 (R.I. 2001) ..., this [c]ourt held that even accepting

plaintiffs argument that a town manager lacked the authority to

execute a lease of town property, people who were not a party to

the agreement did not have standing to challenge its validity.);

id. (refusing to allow exception to the standing requirement and

affirming dismissal of plaintiffs lawsuit seeking declaratory and

injunctive relief).

When confronted with a request for declaratory relief, a trial

justice must first determine whether a party has standing to sue.

Bowen v. Mollis, 945 A.2d at 317; Depetrillo v. Belo Holdings,

Inc., No. PB 09-3367, 2009 WL 3794902, at *1 (R.I. Super. Ct. Nov.

6, 2009)(citing Bowen). The most fundamental characteristic of

standing is that it focuses on the party seeking to have a claim

entertained and not on the issues he wishes to have adjudicated.

McKenna v. Williams, 874 A.2d 217, 225 (R.I. 2005). Thus, when

standing is at issue, the focal point shifts to the claimant, not

the claim, and a court must determine if the plaintiff whose

standing is challenged is a proper party to request an adjudication

of a particular issue and not whether the issue itself is

justiciable. Id. (internal quotation marks omitted).



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25

X. Application

In this case, Plaintiffs Complaint disputes Defendants power

to foreclose by challenging the validity of the assignments of her

mortgage and by positing that the provisions of the PSA may have

been violated. However, it is undisputed that Plaintiff is not a

party to the assignment agreements or to the PSA. Thus, Plaintiff

does not have standing to assert legal rights based on these

documents. Brough, 525 A.2d at 921-22; Livonia Props. Holdings,

L.L.C. v. 12840-12976 Farmington Rd. Holdings, 717 F.Supp.2d 724,

747 (E.D. Mich. 2010)(holding that a borrower who is a non-party to

assignments lacks standing to dispute their validity); id. at 736-

37 ([F]or over a century, state and federal courts around the

country have applied similar reasoning to hold that a litigant who

is not a party to an assignment lacks standing to challenge that

assignment.); id. at 747 ([R]egardless of what contracts exist

between which entities, [p]laintiff was not and is not a party to

any of those contracts (including the assignments), and lacks

standing to challenge their validity or the parties compliance

with those contracts here.); id. at 749 (Plaintiff seeks to

challenge whether each and every entity that ever held an interest

in [p]laintiffs Note and Mortgage complied to the letter with the

terms of each and every contract between it and its successor.

These are exactly the types of challenges that [p]laintiff, as a

stranger to those contracts, lacks standing to assert.); id. at



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26

736 (A debtor, for example, cannot raise alleged acts of fraud, or

question the motive or purpose underlying an assignment.).

The principle that a party to a contract does not have

standing to challenge the contracts subsequent assignment is well

established. Livonia Props. Holdings, LLC v. 12840-12976

Farmington Rd. Holdings, LLC, 399 F. Appx 97, 102 (6th Cir. 2010)

(There is ample authority to support the proposition that a

litigant who is not a party to an assignment lacks standing to

challenge that assignment.)(internal quotation marks omitted);

Liu v. T & H Mach., Inc., 191 F.3d 790, 797 (7th Cir. 1999)(holding

that [defendant] lacks standing to attack any problems with the

reassignment of rights under a contract); Turner v. Lerner,

Sampson & Rothfuss, No. 1:11-CV-00056, 2011 WL 1357451, at *2 (N.D.

Ohio Apr. 11, 2011)([I]t is generally accepted law that a

litigant who is not a party to an assignment lacks standing to

challenge [] assignment of a note.)(quoting Livonia Props.

Holdings, LLC, 399 F. Appx at 102)(alteration in original);

Bridge v. Aames Capital Corp., No. 1:09 CV 2947, 2010 WL 3834059,

at *3 (Courts have routinely found that a debtor may not challenge

an assignment between an assignor and assignee.). As the court in

Ifert v. Miller, 138 B.R. 159 (Bankr. E.D. Pa. 1992), explained:

[W]hile the law permits the obligor to raise as a defense

against the assignee the fact that the assignment

contract between the assignor and the assignee was void,

it does not permit the obligor to raise, as a defense,

the claim that the assignment contract between the

assignor and the assignee is voidable: Voidability (based



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14 Thus, the Court agrees with Plaintiff that Michigan law ... doesnot apply to this case. Plaintiffs Mem. at 32. Similarly,Massachusetts law (and the law of other states) also does not apply.Therefore, the Court finds it unnecessary to discuss U.S. Bank NationalAssn v. Ibanez, Nos. 08 MISC 384283(KCL), 08 MISC 386755(KCL), 2009 WL3297551 (Mass. Land Ct. Oct. 14, 2009), a case which Plaintiff analyzesat length, see Plaintiffs Mem. at 18-25, or the cases from otherjurisdictions which Plaintiff cites. The Court notes, however, that noneof these cases provide support for Plaintiffs claim of standing tochallenge the validity of the assignments of her mortgage. Nor do anyof them hold that a plaintiff has standing to sue based upon the legalrights and obligations contained within agreements to which thatplaintiff was not a party.

27

on fraud, for example) can be raised only at the option

of the injured party. 6A C.J.S. 58; see also [Samuel]

Williston[,] [A Treatise on the Law of Contracts] 432

[(3d ed. 1960)] (If, however, the objection to the

validity of an assignment is not that it is void but

voidable only at the option of the assignor ... the

debtor has no legal defense whether or not action isbrought in the assignees name, for it cannot be assumed

that the assignor is desirous of avoiding the

assignment).

Id. at 166 (sixth alteration in original); see also Jarbo v. BAC

Home Loan Servicing, No. 10-12632, 2010 WL 5173825, at *8-9 (E.D.

Mich. Dec. 15, 2010)(rejecting borrowers claim that defective

assignment destroys record chain of title and divests mortgage

holder of standing to foreclose).

To be clear, the question of whether for standing purposes a

non-party to a contract has a legally enforceable right therein is

a matter of state law, Bochese v. Town of Ponce Inlet, 405 F.3d

964, 981 (11th Cir. 2005), and this Court has applied Rhode Island

law in finding that Plaintiff does not have standing,14 see Law re

Standing, Section IX. B. supra at 22-24. The Court has cited cases

from other jurisdictions only for the purpose of showing that the



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15 Identification of Plaintiffs arguments is hindered by the absenceof topic headings over the course of some thirty-six pages of Argument.See Plaintiffs Mem. at 5-41. Consideration of some arguments is alsohampered by the lack of citations which support Plaintiffs statements.See, e.g., Plaintiffs Mem. at 2 (In particular, the Plaintiff hasoffered uncontradicted evidence, provided to her by Saxon Mortgage in aprior Bankruptcy proceeding that transferred the original promissory notehas never been indorsed by the original holder. [sic]); id. at 3-5(listing allegations in Plaintiffs largely single-spaced twelve pageComplaint); id. at 4 (referring to four assignments); id. at 9 (InRhode Island a mortgagor can seek injunctive and declaratory relief toallege that the party seeking to foreclose does not in fact hold themortgage and the note.); id. (Rhode Island is a title theory state.);id. at 13 (citing to an Exhibit M-4 which does not exist in therecord); id. at 19 (identifying two issues allegedly addressed intwenty page Ibanez opinion but providing no page citation); id. at 32(stating that Rhode Island Law ... clearly establishes that a Mortgageis an estate in land); id. at 40 (In Rhode Island a mortgage is definedas a conveyance of land.).

28

principle adopted by the Rhode Island Supreme Court is well

established in the law.

XI. Plaintiffs Arguments15

Plaintiff cites Eisenberg v. Gallagher, 79 A. 941 (R.I. 1911),

as supporting her contention that in Rhode Island she has the right

to challenge an illegal and fraudulent assignment ....

Plaintiffs Mem. at 16; see also id. at 15 (arguing that [t]his

case is still good law and prohibits the Defendants from proceeding

with a foreclosure). To the extent that Plaintiff contends that

the holding in Eisenberg gives her standing to challenge the

assignments or compliance with the PSA, the Court is not so

persuaded. The 100 year old Eisenberg opinion is little more than

one page in length, and it does not discuss or even mention

standing. To the extent that it implicates standing, it

illustrates that a mortgagor has standing to contest a foreclosure



29/36

16 Plaintiff clearly expresses this position in her memorandum:

The evidence which Plaintiff propounds on behalf of her claimis that the assignment[s] are invalid due to fraud and a non-existent entity being assigned a mortgage. Plaintiff didnot allege that the mortgage was transferred into a trust.Rather, she alleges that the mortgage was not transferred intoa trust which sought to foreclose. She alleges that there isno named trust, which contained a PSA which ever acquired thePlaintiffs mortgage or note and alleges that Saxon Mortgageis not a loan servicer, authorized to foreclose. Defendantscan point to no PSA, which includes the Plaintiffs mortgageor note.

Plaintiffs Mem. at 8.

29

proceeding which is not in accordance with the conditions contained

in the mortgage because he is a party to that agreement. See

Eisenberg, 79 A.2d at 942.

Here Plaintiff challenges Defendants authority to foreclose

because she alleges that they do not hold the mortgage and they

thus cannot foreclose. Plaintiffs Mem. at 8; see also id. at 7

(the Plaintiff alleges that the Defendant, CM REO Trust, does not

hold the mortgage.). However, the basis for this contention is

the alleged fraud, defects, and improprieties in the assignments

and possible non-compliance with the PSA which Plaintiff alleges in

her Complaint.16 See Complaint 8-15; see also Plaintiffs Mem.

at 8; id. at 16 (asserting that the argument that Plaintiff[]

cannot challenge an illegal and fraudulent assignment is without

merit). Plaintiff was not a party to, nor a third-party

beneficiary of, these assignments or the PSA, and, therefore, she

has no standing to challenge compliance with these instruments.



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30

See Brough, 525 A.2d at 921; see also In re Wilson, Bankruptcy No.

05-17557FJB, 2010 WL 4934936, at *4 (Bankr. D. Mass. Nov. 30,

2010)(holding that alleged violation of PSA did not affect validity

of assignment); Porter v. First NLC Fin. Servs., LLC, C.A. No. PC

10-2526, 2011 R.I. Super. LEXIS 45, at *6-11 (R.I. Super. Ct. Mar.

31, 2011)(rejecting plaintiffs arguments that a variety of

technical irregularities ... result[ed] in the invalidity of the

foreclosure, including the fact that MERS was not the holder of the

note or mortgage deed on the date of the foreclosure sale, and that

MERS and [assignee] were not acting as an agent of ... the lender;

and that there is no chain of title to MERS or [assignee] or valid

assignment of the Note payable to [lender] because there is no

recorded power of attorney or assignment of interest from

[lender]).

Plaintiff disputes that she is seeking to be a third-party

beneficiary of the PSA. See Plaintiffs Mem. at 16 (The attempt

of the Defendants to suggest that the Plaintiff is seeking to be

[a] third party beneficiar[y] of the PSA is also without merit.).

However, the allegations of paragraphs 14 and 15 (and the relief

sought by paragraph N of the prayer for relief), fairly read,

challenge Defendants compliance with the PSA or the validity of

one or more of the assignments based on non-compliance with the

PSA. This Court is satisfied that Plaintiff is attempting to

invoke rights under agreements to which she is not a party. Thus,



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31

Eisenberg is distinguishable.

Plaintiff also cites several Rhode Island statutes which

pertain to real estate, mortgages, conveyances, and related

matters. See Plaintiffs Mem. at 30-32, 40 (citing R.I. Gen. Laws

19-9-2, 34-11-1, 34-11-4, 34-11-21, 34-11-22, 34-11-24, 34-26-5,

34-26-8, 34-27-1, 34-27-2, 34-27-3, 34-27-4, 34-27-6). The Court

has reviewed these statutes and does not find that they provide her

with standing to raise the matters pled in her Complaint.

In sum, Plaintiffs contention that CM REO is not the holder

of the mortgage is based on her claims that the assignments are

fraudulent and/or invalid and that the requirements of the PSA may

not have not been followed or have been violated. See Plaintiffs

Mem. at 7. As a non-party to the assignments and the PSA, however,

Plaintiff does not have standing to challenge the assignments or

compliance with the PSA. She has not been injured by any alleged

fraud or wrong-doing by Defendants. Plaintiff granted the

mortgagee both the right to assign the mortgage and the right to

foreclose upon default. See Complaint, Ex. D at 2-3. Whether a

subsequent assignee enforces the right to foreclose or the original

mortgagee, Plaintiff will not be harmed so long as she was in

default. Cf. Bridge, 2010 WL 3834059, at *5 ([R]egardless of the

outcome of this litigation, Plaintiff is still in default on her

mortgage and is subject to foreclosure. As a consequence,

Plaintiff has not suffered any injury as a result of the assignment



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32

between Aames and Deutsche Bank[,] nor is there any likelihood that

Plaintiffs request will prevent her alleged injury.).

With respect to Plaintiffs speculation in paragraphs 28-29

and 31 of the Complaint that her loan as been paid in full, factual

allegations must be enough to raise a right to relief above a

speculative level. Twombly, 550 U.S. at 555; see also Justice v.

Dimon, No. 3:10cv413, 2011 WL 2183146, at *3 (W.D.N.C. June 6,

2011)(Post Twombly, to survive a Rule 12(b)(6) motion to dismiss,

a plaintiff must allege facts in the[] complaint that raise a

right to relief above the speculative level.)(quoting Twombly,

550 U.S. at 555); cf. Pealbert-Rosa v. Fortuo-Burset, 631 F.3d

592, 597 (1st Cir. 2011)(noting that Twombly and Iqbal are

relatively recent; developing a workable distinction between fact

and speculation is still a work in progress). Rule 8(a)(2)

still requires a showing, rather than a blanket assertion, of

entitlement to relief. Twombly, 550 U.S. at 555 n.3; see also

Iqbal, 129 S.Ct. at 1950 (Rule 8 marks a notable and generous

departure from the hyper-technical, code-pleading regime of a prior

era, but it does not unlock the doors of discovery for a plaintiff

armed with nothing more than conclusions.). Plaintiffs

allegations with respect to the possible payment of her loan fail

to satisfy this standard. See Iqbal, 129 S.Ct. at 1950

(Determining whether a complaint states a plausible claim for

relief will ... be a context-specific task that requires the



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33

reviewing court to draw on its judicial experience and common

sense. But where the well-pleaded facts do not permit the court to

infer more than the mere possibility of misconduct, the complaint

has allegedbut it has not show[n]that the pleader is entitled

to relief.)(citing Fed. R. Civ. P. 8(a)(2))(second alteration in

original)(internal citation omitted).

Lastly, Plaintiff suggests that if the Court accepts

Defendants argument regarding standing, it will destroy the

fabric of American jurisprudence by allowing fraud to go unchecked

and undefended .... Plaintiffs Mem. at 42. Plaintiff

characterizes Defendants position as abhorrent, id., and asserts

that Plaintiff and similarly situated plaintiffs are defending

themselves from strangers to the title of their homes, who

manufacture fraudulent documents to create standing for

themselves, Plaintiffs Mem. at 42. Totally absent from

Plaintiffs filings is any acknowledgment of the apparently

undisputed fact that she has defaulted on the $220,000 loan which

she used to purchase the Property and which she promised to repay.

See Complaint, Ex. D at 1; cf. Porter, 2011 R.I. Super. LEXIS 45,

at *8 (Plaintiff undisputably borrowed the funds to buy her home,

arranged for the home to serve as security for the Note, and

subsequently defaulted by her nonpayment under the Note. No

holding of this Court should invalidate the foreclosure, which

Plaintiff agreed would ultimately be the consequence of nonpayment



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34

of the mortgage loan.).

It is fundamental that a defaulting party on a material

matter is in no position to invoke affirmative relief in equity.

Beagan v. Citizens Sav. Bank, 30 A.2d 105, 108 (R.I. 1943).

Plaintiff is a defaulting party and is seeking such relief. See

Complaint, prayer for relief; see also Arena v. City of Providence,

919 A.2d 379, 396 (R.I. 2007)(noting that proceedings for

declaratory relief have a great deal in common with equitable

proceedings); Bendick v. Cambio, 558 A.2d 941, 945 (R.I. 1989)

(There is no question that claims for injunctive relief are

clearly equitable.). Plaintiff is not entitled to equitable

relief. Under the circumstances, she is ill-suited to describe

Defendants position as abhorrent.

XII. Summary

The burden of demonstrating standing for purposes of federal

jurisdiction is on Defendants because they are the parties invoking

federal jurisdiction. However, Plaintiff has not disputed subject

matter jurisdiction, and the Court is satisfied from its review of

the Complaint and Notice of Removal that diversity jurisdiction

exists. The instant Motion, which is based on Defendants argument

that Plaintiff lacks standing to assert her claims, is more

properly treated as a motion to dismiss pursuant to Rule 12(b)(6)

for failure to state a claim upon which relief can be granted

rather than as a motion pursuant to Rule 12(b)(1). This Magistrate



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35

Judge recommends that it be treated as such.

Since the basis for this Courts jurisdiction is diversity

jurisdiction, Plaintiffs claims are governed by Rhode Island law.

Under Rhode Island law, when confronted with a request for

declaratory relief, a trial justice must first determine whether a

party has standing to sue. Also under Rhode Island law, plaintiffs

have no standing to challenge the validity of assignments or

agreements to which they are not parties. Because Plaintiff here

was not a party to the assignments or the PSA, she has no standing

to challenge the validity of those assignments or compliance with

the terms of the PSA. In addition Plaintiff, having defaulted, is

in no position to invoke affirmative relief in equity.

Accordingly, the Motion, which the Court treats as a motion to

dismiss for failure to state a claim upon which relief can be

granted pursuant to Rule 12(b)(6), should be granted. I so

recommend.

XIII. Conclusion

For the reasons stated above, I recommend that the Motion to

Dismiss be granted. Any objections to this Report and

Recommendation must be specific and must be filed with the Clerk of

Court within fourteen (14) days of its receipt. See Fed. R. Civ.

P. 72(b); DRI LR Cv 72(d). Failure to file specific objections in

a timely manner constitutes waiver of the right to review by the

district court and of the right to appeal the district courts



36/36

decision. See United States v. Valencia-Copete, 792 F.2d 4, 6 (1st

Cir. 1986); Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603,

605 (1st Cir. 1980).

/s/ David L. MartinDAVID L. MARTIN

United States Magistrate Judge

June 23, 2011


6-23-11 report and recommendation

Documents